Monday, March 2, 2015

The secret life of the Spanish economy

Javier's excellent Spanish-language coverage of the latest GDP figures provides the charts for this entry. Commentary all mine, though.



The big percentage mover behind Spain's Q4 GDP gains was gross fixed capital formation, led by transportation equipment and an improved construction sector.


The government sector (as well as being the only negative contributor) is principally responsible for Spain's negative GDP deflator. The fixed capital formation component (up 5.7 per cent year-on-year in the latest GDP release), shows positive prices for the first time in exactly four years.


Household spending came in at 3.1 per cent over a year earlier. The chart shows spending running well ahead of total wages, raising doubts as to its sustainability. Possibly a symptom of the resumption of recession-delayed purchases, much will depend on the continued improvement of the labour market.

Total goods and services exports improved 3.6 per cent over Q4 2013. Merchandise export order backlogs indicate that strength will continue in the near term.

Lastly, increased employment in the midst of economic growth seems to be taking its toll on Spanish productivity. A good argument can be made that this reflects, as did the enormous efficiency gains over the downturn, the effect of changes in the country's large grey employment market. You can read my very brief description of how this works in a June 2011 post.



Charles Butler, with charts from Javier GarcĂ­a Echegaray.